Dragon Capital Places 8% of Ukraine’s Leading Car Maker for $26 mil.

25.01.2006
Ukraine’s second largest automobile producer, LuAZ, has raised USD 26 mil. from foreign investors in a debut initial public offering of 8% of its stock. The Kyiv-based investment bank Dragon Capital acted as lead manager and sole bookrunner for the issue.

Kyiv, January 25, 2006 – Ukraine’s second largest automobile producer, LuAZ, has raised USD 26 mil. from foreign investors in a debut initial public offering of 8% of its stock. The Kyiv-based investment bank Dragon Capital acted as lead manager and sole bookrunner for the issue. The above amount includes USD 16 mil. raised through the sale of LuAZ’s current shares and USD 10 mil. worth of rights due on February 15. The placement was completed at the offer price of USD 0.27/share, valuing LuAZ at USD 200 mil. European investors bought ѕ of the issue and U.S. investors purchased the remainder. Despite the turbulent political situation in Ukraine earlier this month, which culminated in the dismissal of the government just as Dragon Capital took LuAZ on a European road show, the issue was two times oversubscribed. “This is just the onset of the IPO boom Ukraine is about to experience,” said Tomas Fiala, Dragon Capital’s managing director. “There will be at least a dozen more IPOs by Ukrainian companies in 2006.”

“Regardless of the heightened political risks, accentuated by the upcoming parliamentary elections in March, Ukraine is firmly on the road to radical economic reforms and integration with the West and its capital markets,” Fiala added.

Part of LuAZ shares sold in the IPO are being converted into GDRs and will be listed on the Frankfurt Stock Exchange. The company was also listed on the main Ukrainian exchange, PFTS. 

The IPO complements LuAZ’s USD 240 mil. capital raising program aimed at gaining leadership in domestic production of cars, buses and trucks. The company, with 2005 car output of 31 ths. vehicles (up 38% y-o-y and 16% of Ukraine’s total), is expected to report net sales of USD 149 mil. and net income of USD 23 mil. for the year.

By placing LuAZ, Dragon Capital completed its second IPO in as many months. In December 2005, the bank placed a 10% stake in one of Ukraine’s largest retail chains, Velyka Kyshenya, for USD 27.5 mil.

 

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